Why TI does MCU designs in Shanghai

SHANGHAI – Multinational chip companies who’ve consigned some of their design work to China tend to do so as quietly as possible; but a few leading companies are clearly making deeper inroads in China, and they’re not especially shy about it.

Texas Instruments is a good example.

Its newest MCU design center based in Shanghai recently saw its first locally designed device successfully taped out. While TI is not disclosing the size of its team, Scott Roller, vice president of TI Microcontrollers, in a recent interview with EE Times, described the MCU design center in Shanghai as “a sizeable team, with multiple designs going on.”

TI’s Shanghai-based MCU design center, whose operation started in early 2011, is the newest addition to the company’s three others worldwide. They include design centers in Germany, Bangalore and Dallas.

It’s important to note that TI’s facility in China is not there just to support existing MCU products. Rather, it actually executes some MCU product line development from China. “This is to develop MCUs – built in China for China,” said Roller. The design center performs every job – ranging from sales, application developers to system and processor designers and application field engineers – necessary to do the design work in one place. “We cover everything -- from front to back end,” said Roller.

Scott Roller, vice president of microcontrollers at Texas Instruments

Why design in China?

Asked why design in China, Roller gave two straightforward reasons: “First, you can move much faster. Second, by designing it locally, there will be less room for misinterpretation.”

Although in theory, that may make sense, not every multinational has gone that far in their public commitment to designing in China.

Earlier this month at the Freescale Technology Forum in San Antonio, Texas, Gregg Lowe, Freescale Semiconductor's new president and CEO, said the China market is in transition from a low-cost manufacturer of electronics products designed in the West to a true high-tech hub with the design capability to create products for its massive domestic market.

Chip vendors who want to sell products in China need a strong presence there, Lowe said. IC vendors don't necessarily need to design their products in China, but they need to have applications engineers and system engineers right there to be successful there, Lowe said.

The fundamental difference in China, however, is China’s speed, said Allen Wu, president of ARM China. Design cycles for SoCs in China are generally much shorter, he observed. “From design starts to tape-out, sometimes it takes only five to six months. [Local companies] make decisions much more quickly and they react to the market very fast.”

So, by the time multinationals finally reach a decision on a specific design back at headquarters, that may have already become irrelevant on the local Chinese market, explained Wu.

TI’s Roller stressed that TI did not build its MCU design center in China “because of the cost.” He said that engineering talents may be “a bit cheaper but you don’t really save money.” TI has done this “because we want to design and produce products closer to where the demand is.”

One of the biggest MCU market segments TI is after in China is a smart metering device based on China’s state grid program. TI taped out the first product and is sampling it now, said Roller. “This is a huge opportunity for us.”

TI’s two key MCUs used in China include MSP430 ultra-low-power 16-bit microcontrollers and C2000 32-bit microcontrollers.

Asked which other multinationals are commanding a strong presence in the MCU market in China, Roller mentioned Freescale and Renesas.

Freescale – with a long history in China – may be pulling back a little, TI’s Roller said. But he quickly added: “That may change with the new CEO,” referring to Freescale's Lowe who was ex-TI executive.

Freescale’s Lowe, while at TI, most recently led the Dallas-based company’s analog business. TI has already established several analog design centers in China.

At the interview held at the Freescale Technology Forum, Freescale’s Lowe acknowledged "Design decisions will move." He said, "You can't just go to Silicon Valley anymore. That's still a very important place to go, but you need to be in all of the places where chips are being designed into systems to be close to customers and understand customer requirements."

It is a win-win decision to establish design center for TI in Shanghai.
On one hand, TI could sell more chips to the most market China in globle and get big profit by closing to the demand market.
On the other hand, more Chinese engineer have chance to enter into TI to learn knowledge and accumulate experience.

Check out Scott Roller's Linkedin profile - that explains his smile and the demise of TI's management proficiency. I just spoke to a friend at TI about how they were doing and he mentioned that China was eating their lunch in analog products. Seems China hired several contractors from the US a while ago (unemployed no doubt), paid them handsomely, and they solved their analog process problems within ~3 weeks. Now China is dialed in. No more field advantage for the US.
Like we found with Russian nuclear engineers, unemployed US semiconductor engineers can be a loose cannon for hire.

India's design talent used to have an edge over China's but I am afraid the margin has shrunk. Access to fab for post-Silicon characterization and design iterations give a huge advantage (while India is busy putting out press releases on its fab plans about once every six months!).
MP Divakar

Junko, to your point, TI has invested in India starting in the late 80's when many similar businesses were running as far away from it. The initial years for TI in India were loss leaders but TI believed that the market there took longer than in other countries. Overall, investing in India has paid off to TI.
I have a hard time believing the design cycles move much faster in China for MCU's. It can certainly be replicated here in the US and in other places like India.
MP Divakar

In tune with, as a]close as possible to, the Chinese customers? You can't be serious? TI, like everyone else has a ton of offshore deferred-taxes cash it does not want to return to the US to get taxed. They could care less about where it's designed or for what reason or even about IP protection...a microcontroller is a microcontroller that an APPS TEAM is in tune with he customer on requirements with. The IP protections are a non issue for execs who only care about keeping that offshored cash from coming back and paying for our jobs, roads, schools, retirement, and wars.

How 'IP is in danger' for a digital IP of a MCU? Unless an employee leak out all the rtl and custom block designs, it's really hard for any company to produce a compatible IP product in a short time. And the market won't wait for anyone to do so. That's why the Chinese won't simply copy a complex MCU or SoC product. Analog IPs, on the other hand, needs more protection.

I'm glad you're aware that your IP is in danger. I'm curious how you calculate that the risk of not having a design center in China is higher than the risk of losing your IP portfolio. TI has a fantastic legal department, but that has very little impact in China.